Tax ‘Extenders’ bill gets signed by President Obama on December 18 2015.

Published:

The Protecting Americans from Tax Hikes (PATH) Act of 2015 retroactively extended over 50 taxpayer (favorable) tax provisions.  These are the temporary tax provisions that are routinely extended by Congress on a one or two year basis.  Some provisions have now become permanent.  Here are a few of the permanent tax breaks:

  • The $500,000 expensing limitation and $2 million phase-out amounts under Section 179
  • Research and development tax credits
  • Enhanced child tax and earned income tax credits
  • Enhanced American opportunity tax credit
  • Tax-free distribution from IRAs for charitable purposes
  • Deduction for certain expenses for elementary and secondary school teachers
  • Deduction of state and local general sales taxes

The Act also extends ‘bonus’ depreciation for 2015 – 50% first-year – but this was not made a permanent provision.

Starting in 2016, eligible small businesses that claim the research tax credit, can now claim the credit against their alternative minimum tax (AMT) liability.  In addition, start-up businesses may claim the credit against FICA tax liability, specifically if there is no income tax liability.  These two new provisions are a huge win for eligible small businesses!

These are the highlights of the new act.  If you have specific questions, please contact your tax advisor at Greenwalt CPAs.